Author(s): Raghu Gopal
Last week, LeEco agreed to buy US-based television maker Vizio, for $2 billion. For those who haven't heard of LeEco, it's a Chinese tech company well known in China for its video content. For those who haven't heard of Vizio, it's a leading television brand in the US, competing against Samsung and LG on price.
LeEco first caught the attention of CCS Insight in early 2015 — it was called LeTV back then. See Bold Expansion Plans from LeTV (Who?) for our analysis. The company's assertive plans to push into markets outside China by combining hardware with content were a development we expected from some newer manufacturers. LeEco is sometimes called the Netflix of China given its wide catalogue of streaming content, but the company also sells lots of hardware in China, primarily TV sets. But it has also been ambitiously pushing into the smartphone industry and selling products in India.
We've noted that LeEco is a company that likes to be first: it was the first smartphone maker to introduce a Qualcomm Snapdragon 820-based device; the first to introduce a smartphone without a 3.5mm audio jack; and the first to use USB Type-C in a smartphone. There's been very limited first-mover advantage with any of these features, but it has provided the company with some free publicity.
With the acquisition of Vizio, LeEco is getting a known brand in the US. Vizio, founded in 2002 with a strategy of jumping into the early flat-panel TV market, quickly grew to challenge the top TV makers in the US, thanks largely to its lower prices versus rivals such as Samsung and LG.
LeEco founder and CEO Jia Yueting said in a statement that "acquiring Vizio is an important step in our globalization strategy and building our North American presence." The company recently opened its US headquarters in San Jose, California and has offices in San Diego, Seattle and Los Angeles.
The acquisition makes LeEco the number-two player in the US smart-TV market. It gets immediate retail shelf space and distribution agreements with top US retailers including Costco, Best Buy and Walmart. These companies have been instrumental in Vizio's success as a budget brand.
Given the challenges of breaking into the US smartphone market, LeEco's latest move will allow the company to raise awareness and build its presence in the country.